Infrastructure Week Part One: Collaborating with Contractors to Control Costs

Infrastructure Week Part One: Collaborating with Contractors to Control Costs

I have mixed feelings on how best to support Infrastructure Week. As an engineer who has made his career helping clients find creative ways to fund and develop life-sustaining water and wastewater facilities, I understand the pressures municipalities and utility districts are under to get these critical projects off the ground. When faced with the numbers—a national water infrastructure investment gap of $82 billion per year—it’s easy to feel a little defeated. However, I have learned that many of the same people we try to ‘educate’ during Infrastructure Week already know the problem we face. What’s missing is the focus on ways we can help them become a part of the solution. 

So instead of simply advocating for more infrastructure investment this week, I want to spend some time sharing a story about a recent project that ended up coming in under budget by 10% because of unlikely communication channels. If we, as engineers and project managers, understand that the many people involved in our projects who are giving us funding packages or providing bids recognize our efforts to get the best value for our clients, we will no longer be victims to the challenging bid climate and won’t take ‘no’ as the final answer when it comes to stretching our client’s dollars. 
 

Can we drive down construction costs with collaboration?

One of the major issues we face when trying to fund municipal wastewater projects is the rising cost of construction. We have seen prices rise as much as 20% over the past two years. This is of course not unique to the water and wastewater field. Due to the strong economy, the improving rate of construction in the US, and the industry’s labor shortage which is down 20% from ten years ago, construction companies and suppliers can increase their prices using the age-old premise of supply and demand—leaving us with projects that are over budget and tough decisions on what components to remove to make these projects feasible for our clients. 

However, there are ways to work with construction companies to get the most for our clients. On a project we recently put out to bid for a major water and sewer project in Madawaska, Maine we kept in close communication with a few of the construction companies that we knew were busy, but we wanted to bid the work.  For the months preceding our bid, we and the client continuously reached out to these companies personally to discuss the scope of the project and were extremely clear in what we wanted out of our contractors. The result was something that I have not seen in our decades of collective experience and the multitude of projects we’ve put out to bid for our clients, two bids that came in less than $2,000 apart on a $2,800,000 project and under our estimate by 10%.  In fact, the bid pricing was so close that the two companies are currently in discussions regarding sharing resources to staff the project with the low bidder subcontracting work to the other contractor.  This collaboration is providing the secondary benefits of addressing the very short construction season in northern Maine and giving our client the security that the project will be completed as quickly as possible, minimizing disruptions to residents of the community and an active paper mill, which is the dominant employer in the region. 

By keeping the guesswork down for construction companies and providing constant communications, we made their bidding process more streamlined and in return allowed them to find ways to keep costs down for our clients.   There will never be a replacement for accurate and thorough design packages when seeking the best pricing for our clients, however seeking creative approaches to contractor engagement and taking the time to understand their challenges can also bear fruit for our clients looking to stretch their limited funds as far as possible.
 

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Senior Client Manager
Government & Institutional

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Nate McLaughlin, PE
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